Wednesday, June 29, 2011

To say that India's black money problem is a gargantuan one is stating but the obvious, but when some estimates peg the quantum of the parallel economy at USD1.4 trillion, it forces you to sit back and take notice. Remember Jim Carey in 'The Mask'? It’s almost as eyepopping, and then some. It’s a figure larger than the GDP of the country. Much of this wealth sits happily ensconced in tax havens and private banks, safe from prying Governments. While the Indian establishment tries its hardest to get its hands on some of this ill-gotten wealth (even recovering some part of it might significantly ease the country's fiscal imbalance), and even persecutes millionaire studfarm owner, Hasan Ali, not much headway has actually been made. And it’s unreasonable to expect any immediate results - some suggest another Voluntary Disclosure Scheme as a quick fix remedy, but that runs the risk of legitimizing the very scourge from which we need such an urgent cure. And the remedy must necessarily come from directly within the principal players in this sordid drama.

First, the government. It’s not particularly difficult to see why we have such a massive problem on hand. Clean business and clean money both need a clean financial and political ecosystem to flourish and circulate in, respectively. India clearly does not provide that ecosystem. The culture of corruption and gratification runs deep, so much so, that someone doing an honest day's work is looked upon with incredulity. So whereas in developed countries, while corruption exists, it seldom affects day to day life, in India it is all pervading and omnipresent, right from the traffic signal to the parliament. Successive governments have failed to show any degree of political will in tackling the problem and have never been close to showing zero tolerance for corruption. The current lot doesn’t even have disruptive coalition constraints to contend with, yet they have presided over the most damning series of scandals in memory. Clearly no one at the heart of government has been interested in reading out the riot act. And meanwhile...Rome burns. Some shrug and blame offshore havens, but it is important to note that we do have financial treaties with many of these jurisdictions, and the need of the hour is for us to work in more teeth into these treaties so that we can wield more than the current degree of power we possess to go after misappropriated funds hidden there.

An oft forgotten contributor to this problem is the private sector. It is easy to miss part that banks, tax evading corporations and greedy businessmen/professionals play in this monetary circus. Rich and unwilling to pay those worthless taxes with your hard earned rupee? You are almost certain to find an eager private banker willing to provide comprehensive 'solutions' to help you meet your needs. It is still not uncommon to overhear private bankers discussing customers walking in with suitcases full of cash. The profit motive in the private sector allows money, both legitimate and tainted, to escape the system, with willing customers ready to fork out hefty management fees to maintain the tax free status of their cash, which remains safe in complicated financial structures in off shore tax havens. In this regard, stricter Anti - Money Laundering legislation needs to be enforced and sometimes tenacious measures need to be taken against the big financial institutions, as seen in the case of the United States going after UBS AG. While most such institutions tend to remain on guard when it comes to links with drug money or possible terrorist funding, there remains a tendency to go soft when it comes to the rather vanilla issue of tax evasion. There are clear examples of willful collusion and examples need to be made of some of these 'reputable' names. Our rapacious capitalism, regardless of its nature, still needs to have morals, and just as the financial system seems to have learned from the 2008 financial meltdown (or has it?), we need to draw lessons from the constant use of the financial system both as a conduit for money laundering as well as a feeder of bureaucratic greed and tighten the gaps, fast.

The third and final corrective measure that needs to be put in place is one that needs to be directed towards ourselves. We cannot live as a nation of hypocrites. On one hand we pay lip service to Anna Hazare's or Baba Ramdev’s anti-corruption fasts, and on the other, we don't think twice before bribing the neighborhood policeman to escape a misdemeanor, a government clerk to move our file or the tax inspector scrutinizing our returns. We must remember that for every hand that takes, there is a hand that gives. And it is here that the bacterium of black money germinates, everything else is just a matter of scale and detail. We need to stop giving and we need to show patience. Only sustained action can lead to any sort of seismic shift in our embedded graft culture. While this might not bring back the billions already lost, it will at least help reduce this malaise in the ambit of our daily life. And that will be a significant battle won.

Saturday, June 18, 2011

There are numerous little things all around us that can help our state of mind when we feel stressed, depressed or just plain fed-up with our daily 9 to 5. While feeling grumpy is easy enough, inspiration to dust yourself off and seize the moment is omnipresent. I list but five things that have inspired me recently.

1. Mamata Banerjee. She fought the CPI(M) for over 20 years. She had her skull cracked open, legs broken and teeth smashed. Regardless, she carried on as the lead political opposition to one of the most entrenched electoral machineries anywhere in the world. Armed only with raw courage, immense patience and the fight of a pitbull, she finally overcame after a two-decade struggle. And won. Love her or hate her, she inspires. True grit, if you ever saw it.

2. My son. It's interesting to watch a toddler learn and grow. My naughty little boy goes hard at the simple things - like trying to count from one to ten, or climbing up onto the bed, or eating his lunch himself. If a little fella can put in so much effort into small little things, I'm sure so can we.

3. 2nd April 2011. Where were you? I was right in front of a giant TV screen biting my nails. And then Mahendra Singh Dhoni sized one up from Nuwan Kulasekara and clouted it over long on for six. And then watched is sail into the stands, with a nonchalant twirl of his bat. And a nation erupted in joy and tears. An image for a generation.

4. Rocky Balboa (2006). The man's still got it. Sample this - "Let me tell you something you already know. The world ain't all sunshine and rainbows. It's a very mean and nasty place and I don't care how tough you are it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain't about how hard ya hit. It's about how hard you can get it and keep moving forward. How much you can take and keep moving forward. That's how winning is done!". A heck of a 'punch'-line.

5. The Ajmer beggar. A beggar in Ajmer died with a bounty of a few lakhs of rupees in currency notes on his person. He died rich, in my view. A lifetime in poverty had ended in prosperity. While it's a pity he did not live longer to enjoy his wealth, it's a testament to the power of saving, frugality and discipline. It's hard not to get distracted with the latest gazillion-inch HDD 3D panel and the newest I-whatever. But keep at it and in the end, you'll be better off.

Thursday, June 16, 2011

John Zubrzycki, an Australian journalist, has good knowledge of India, her history and the myriad ways in which she works. It is therefore no surprise that he comes up with a convincing, gripping and insightful account of a man and a dynasty that's not written about very much.

The book charts the saga of the fabulously wealthy Nizams of Hyderabad, and initially outlines Indian history from the end of the Mughal period. These sections could appear a bit dry to some, and they delve into the dynamics of the relationship of the British administration of the time with the many princely states. Nonetheless, these pages succeed in involving the reader and in providing a sound base for what is to follow. Things get particularly interesting when the book begins to detail the life and times of the seventh and penultimate Nizam (also the richest man in the world at the time, whose collection of jewels alone could fill a couple of Olympic sized swimming pools), a somewhat eccentric and endearing creature, whose tales of thrift were legendary. He nominated Mukkaram Jah, his grandson as the next (and as it turned out, last) Nizam, bypassing his extravagant and distracted sons. Mukkaram Jah himself is a bit of a recluse, who now lives in anonymity in Turkey, and is the ultimate tragi-comic hero. Jawaharlal Nehru wanted the genteel, well heeled Oxbridge product in government, but he refused. He spent his initial years attempting to unravel his inheritance, which was perhaps at the time the largest going around, worth many hundreds of millions of dollars. It proved too much of a task for him and he succumbed to the hundreds of court cases from numerous relatives who wanted shares in his grandfather's property. Mukkaram then moved to Australia for many years, attempting to remodel himself into a gentleman farmer, purchasing a massive ranch. But a good manager and businessman he was not and the ranch proved financially unviable, running up huge losses and ultimately shutting down in the 90s.

The book, littered with many fascinating and curious characters, serves as reminder that great wealth can sometimes serve up great pain. Much of the Nizam's massive fortune has been squandered by his grandson, lost or sold by corrupt and opportunistic relatives or smuggled out of the country by covetous family retainers. The last Nizam, for all his education, remained an elitist who couldn't be bothered to get his hands dirty himself, and always relied on the advise of others, a sure recipe for disaster. "I know I am the Nizam of Hyderabad", he once told The West Australian, "and that's all that matters". He still has great pride in his roots and in this ancestry. Now alone and reclusive, that's all he seems to have left. The book is also a peek into the grandiose, graceful and glorious world of the once powerful Nizams, and its a world that's escaped mainstream historical attention. 'The Last Nizam' goes some distance in attempting to correct this injustice.